"I highly respect the Shin Bet director, but I do not agree with his assessment," Olmert said, referring to Yuval Diskin's remarks two days ago.

Netanyahu, Olmert clash (Photo: AP)

Still, the entire Palestinian Authority has turned into Hamas in the wake of the new parliament's swearing-in ceremony, Olmert said, making his first appearance before the Knesset's Foreign Affairs and Defense Committee.

Olmert also butted heads with Likud Chairman Benjamin Netanyahu, as the two argued at length over Prime Minister Ariel Sharon’s intentions on the issue of permitting East Jerusalemites to vote in Palestinian elections.

“No one can tell me what Sharon intended,” Olmert said. “I talked to him and if you want I can prove it in writing.”

Another session highlight was the verbal confrontation between Olmert and Knesset Member Effie Eitam over the violent clashes at the West Bank outpost Amona.

"How is it that you came in here without the cavalry?" Eitam mockingly asked Olmert.

Eitam, who was injured in the Amona evacuation, received a prompt response from Olmert: "It's because I was told ahead of time that you're coming unarmed."

On another front, the dismantlement of illegal settlement outposts will be carried out “without reservations,” Olmert added Wednesday. When Eitam wondered whether Olmert also intended to deal with illegal construction in Arab communities, Olmert responded: “I have done more in this field than any of the people who chatter on about it.”

“Don’t call me a chatterer,” an angered Eitam snapped back and demanded that Olmert apologize.

Interrupting the spat, MK Matan Vilnai (Labor) retorted “I didn’t know a kick in the head from a horse could affect a Knesset member so much,” referring to the head injury Eitam sustained while resisting evacuation of the Amona outpost earlier this month.

'Racist anti-Semite and hater of Israel'

Meanwhile, the acting PM said that from the moment the Hamas-led Palestinian parliament was formed, the entire PA became Hamas.

"We won't distinguish between shades," he emphasized.

The acting prime minister said that 50 percent of the money transferred to the PA from Israel has been distributed among Israeli companies providing the PA with services, and the rest was used for salaries, meaning "that the chances are low that the money will be used for terror."

Turning his attention to the Iranian threat, Olmert said that Iranian President Mahmoud Ahmadinejad is "a racist anti-Semite and a hater of Israel."

On Tuesday, Shin Bet chief Yuval Diskin told the Committee that a Hamas state along Israel's eastern border could develop into a strategic threat, and announced that mortar rounds intended for attacks against the Jerusalem district of Gilo were found by the army.